Share Name Share Symbol Market Type Share ISIN Share Description
Pme African Infrastructure Opportunities Plc LSE:PMEA London Ordinary Share IM00B1WSL611 ORD USD0.01
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +$0.00 +0.00% $0.075 $0.05 $0.10 $0.075 $0.075 $0.075 0 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
General Financial 0.0 -1.5 -6.2 - 8.00

PME African Infrastructure Opps PLC Final Results

10/05/2019 7:00am

UK Regulatory (RNS & others)


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RNS Number : 5685Y

PME African Infrastructure Opps PLC

10 May 2019

10 May 2019

PME African Infrastructure Opportunities plc

("PME" or the "Company")

(AIM: PMEA.L)

Final Results for the year ended 31 December 2018

PME African Infrastructure Opportunities plc announces its audited results for the year ended 31 December 2018.

Financial Highlights

   --      Net Asset Value of US$3.7 million (2017: US$5.2 million) 
   --      Net Asset Value per share of US$0.15 (31 December 2017: US$0.21 per share) 
   --      Loss for the year ended 31 December 2018 was US$1.5 million (2017: loss of US$0.9 million) 
   --      Basic and diluted loss per share of US$0.0615 (2017: loss per share of US$0.0241) 

For further information please contact:

 
 
   Cenkos Securities plc 
   Nominated Adviser 
   Azhic Basirov / Ben Jeynes        +44 20 7397 8900 
 Stifel Nicolaus Europe Limited 
  Broker 
  Neil Winward / Tom Yeadon        +44 20 7710 7600 
 

Market Abuse Regulation disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Chairman's Statement

On behalf of the Board of Directors (the "Board"), I am pleased to present the annual results for PME African Infrastructure Opportunities plc ("PME" or the "Company" and together with its subsidiaries the "Group") for the year ended 31 December 2018.

The remit of the Company's directors (the "Directors") under the Company's investing policy is to seek to realise the remaining assets of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

Investments

The Company now has one remaining asset, namely a leasehold building in Dar-es-Salaam, Tanzania (the "Dar-es-Salaam Property"). The Dar-es-Salaam Property, which is managed by a local managing agent and to which PME has the benefit of the remaining 20 year lease, is currently 81.4% let. The investment continues to trade profitably.

In 2010 PME Properties Limited acquired the Dar-es-Salaam Property from Dovetel (T) Limited ("Dovetel"), the Company's former telecommunication investee company in Tanzania. Dovetel was also a tenant of part of the Dar-es-Salaam Property. On 19 October 2017, PME Properties Limited issued an eviction notice to Dovetel for non-payment of rent. On 3 December 2017 the eviction was carried out. On 22 February 2018 the Directors were informed that a representative from First Seal Ltd, the company who had acquired the share capital of Dovetel had made a complaint to the police. On 28 February 2018 a letter was sent to the police by the lawyer appointed by PME Properties Limited to explain the eviction to the police. The letter outlined the background to the eviction and documentation was provided to prove the Group's proper ownership of the building and that Dovetel were merely a tenant of the property. It was also explained to the police that the eviction was conducted by the landlord through the Court Broker who is legally authorised and therefore the eviction was not a criminal matter.

The police continued their investigation and presented their findings to the public prosecutor. The public prosecutor decided to charge the Court Broker who executed the eviction. The judge in the case has asked for additional information from all parties. PME have been asked to provide evidence that they are the rightful owner of the tenancy agreement. This information has been provided. The owner of the land on which the Dar-es-Salaam Property is located has been asked by the police to confirm his ownership of the land. The Company understands that the owner of the land will be confirming ownership to the authorities shortly. It is difficult to say when there will be a final judgement in respect of the charges against the Court Broker.

The demand for high end offices in Tanzania has not improved due to the ongoing economic outlook. The prospect of selling the leasehold building in the short term for a reasonable price remains uncertain. A data room has been prepared so that the Company will be able to progress the marketing of the Dar-es-Salaam Property when appropriate. In preparing the information for the data room it was confirmed by the Company's lawyers that the caveat on the land register had not been removed. The Directors had previously been incorrectly advised that the caveat had lapsed. The formal process to remove the caveat has started with an application being submitted to the High Court in Tanzania.

At 31 December 2018, the Directors have decreased the value of the Dar-es-Salaam Property to US$3.62m. This valuation is in line with an updated value assessed by the local expert at that date and reflects the continued uncertainty as to the economic position of Tanzania, a decline in the market for high end office accommodation, a decrease of rental income during the period and a reduction in the remaining lease term.

In 2016 the Tanzanian Revenue Authority ("TRA") performed a tax audit for the years 2013 to 2015 looking at inter alia withholding tax, VAT and income tax. Noting the immaterial amount and the likely timeframe for any review, the Board has accepted their assessment for withholding tax and VAT which concluded that an additional US$37k of tax was due. The Board would like to meet this liability via the application of existing tax credits (the company holds $221k of available tax credits up to 31 December 2015), although this has yet to be accepted by the TRA.

As disclosed in prior results statements, the TRA also assessed an additional income tax assessment of approximately US$256k for the years 2013 to 2015. The Group did not agree with this assessment and hence started an appeal process and did not make a provision in the accounts for this balance. However since the tax audit, the TRA has offered a tax amnesty for all prior tax liabilities allowing interest on late payment to be ignored provided the application was received by 30 November 2018 and the amounts owed were settled prior to 30 June 2019. In order to ensure that the Group is able to effectively wind down the operations in line with its investment policy, the Group has decided to take advantage of the amnesty and therefore has applied to make a total payment in line with the TRA's assessment of income tax. The majority of this payment will be made via the existing tax credits. Whilst the appeal process continues, its timeline to resolution, as well as the end result, are both inherently uncertain whilst utilising the amnesty allows the Group to draw a financial line under the tax queries raised by the TRA and hopefully closes out this historic matter in an efficient way for shareholders. Due to the Company applying to use the tax amnesty, the liability under the tax amnesty application has now been recognised in the year-end valuation of the real estate investment. The Board continues to work with its subsidiary's advisers to finalise the tax position of the Tanzanian company with the local tax authorities and hence ensure that this does not become an impediment to the Company's wind down, once the existing Dar-es-Salaam Property is sold.

PME has also been working with its local bank to have the inter group loan between PME Properties Limited and PME TZ Property (Mauritius) Limited registered with the National Bank of Tanzania. This registration is time consuming and is being transferred to a number of departments within the National Bank. A repayment cannot be made until the registration process is complete. This is taking considerably longer than expected.

Until the registration is resolved, the Group is not able to pass funds through the Company. Delays in the Group's ability to provide upstream funding to the Company may result in a lack of working capital at the holding company level in the short term. Optas GmbH ("Optas") a company related to me is assisting when the Company has cash flow issues. On 3 May 2019 the Company entered into a secured loan agreement with Optas to provide a facility of up to EUR400,000 to assist with general working capital. The loan is secured on the Company's cash receivables, is repayable within 18 months and attracts interest at a rate of 6% per annum on the utilised facility and 1% on the remaining unutilised facility. I hold 50% of Optas's issued share capital, therefore Optas is deemed to be a related party of the Company and the loan is a related party transaction.

Financial Results

The loss for the year to 31 December 2018 was US$1.513 million (2017: loss of US$0.875 million), representing a US$0.0615 loss per Ordinary Share (2017: loss per Ordinary Share US$0.0241). The loss for the year was made up of the net loss in the fair value of assets plus ongoing operating and administrative costs.

The Directors, having considered the latest valuation of the Dar-es-Salaam Property, are of the opinion that the Dar-es-Salaam Property is reflected in the balance sheet at realistic fair value.

As at 31 December 2018, PME's Net Asset Value attributable to ordinary shareholders in accordance with IFRS was US$3.7 million (US$0.15 per share), compared to the US$5.2 million (US$0.21 per share) that was reported as at 31 December 2017.

Return of Cash and Outlook

The Directors will market the sale of the Dar-es-Salaam Property, provided the local economic uncertainty has receded, the caveat has been removed and confirmation that the police investigation has been finalised with no further action being taken.

A further and final tender will be proposed once the building has been sold. It is not possible to give a timeline as to when this may take place.

Paul Macdonald

Chairman

9 May 2019

Statement of Comprehensive Income

 
                                                                                        Year ended          Year ended 
                                                                                  31 December 2018    31 December 2017 
                                                                          Note             US$'000             US$'000 
 
 Net losses on financial assets at fair value through profit or loss       3               (1,220)               (204) 
 Dividend income                                                                               270                 226 
 Operating and administration expenses                                     9                 (552)               (898) 
 Foreign exchange (loss)/gain                                                                 (11)                   1 
-----------------------------------------------------------------------  -----  ------------------  ------------------ 
 Loss before income tax                                                                    (1,513)               (875) 
 
 Income tax                                                                13                    -                   - 
-----------------------------------------------------------------------  -----  ------------------  ------------------ 
 Loss and total comprehensive expense for the year                                         (1,513)               (875) 
 
 Basic and diluted loss per share (cents) attributable to the equity 
  holders of the Company 
  during the year                                                          5                (6.15)              (2.41) 
-----------------------------------------------------------------------  -----  ------------------  ------------------ 
 

The accompanying notes form an integral part of these financial statements.

Balance Sheet

 
                                                          Note   As at 31 December 2018   As at 31 December 2017 
                                                                                US$'000                  US$'000 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Assets 
 Current assets 
 Financial assets at fair value through profit or loss     3                      3,584                    4,687 
 Prepayments                                                                         26                       26 
 Cash and cash equivalents                                                          139                      554 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total current assets                                                             3,749                    5,267 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total assets                                                                     3,749                    5,267 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 
 Equity and liabilities 
 Equity 
 Issued share capital                                      6                        246                      246 
 Capital redemption reserve                                7                      1,559                    1,559 
 Retained earnings                                                                1,852                    3,365 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total equity                                                                     3,657                    5,170 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 
 Current liabilities 
 Trade and other payables                                  8                         92                       97 
                                                         ----- 
 Total current liabilities                                                           92                       97 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total liabilities                                                                   92                       97 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 Total equity and liabilities                                                     3,749                    5,267 
-------------------------------------------------------  -----  -----------------------  ----------------------- 
 

The financial statements were approved and authorised for issue by the Board of Directors on 9 May 2019 and signed by:

   Paul Macdonald                                                    Lawrence Kearns 
   Director                                                                   Director 

Statement of Changes in Equity

 
                              Share capital   Capital         Retained earnings     Total 
                                               redemption 
                                               reserve 
                                    US$'000   US$'000                   US$'000   US$'000 
 ------------------------------------------  --------------  ------------------  -------- 
 
 Balance at 1 January 2017                      410   1,395               7,682     9,487 
-------------------------------------------  ------  ------  ------------------  -------- 
 Comprehensive expense 
 Loss for the year                                -     -                 (875)     (875) 
-------------------------------------------  ------  ------  ------------------  -------- 
 Total comprehensive expense for the year         -     -                 (875)     (875) 
-------------------------------------------  ------  ------  ------------------  -------- 
 Transactions with owners 
 Tender offer (note 6)                        (164)    164              (3,442)   (3,442) 
-------------------------------------------  ------  ------  ------------------  -------- 
 Total transactions with owners               (164)    164              (3,442)   (3,442) 
-------------------------------------------  ------  ------  ------------------  -------- 
 Balance at 31 December 2017                    246   1,559               3,365     5,170 
-------------------------------------------  ------  ------  ------------------  -------- 
 
 
 
 
 Balance at 1 January 2018                   246   1,559     3,365     5,170 
------------------------------------------  ----  ------  --------  -------- 
 Comprehensive expense 
 Loss for the year                             -       -   (1,513)   (1,513) 
------------------------------------------  ----  ------  --------  -------- 
 Total comprehensive expense for the year      -       -   (1,513)   (1,513) 
------------------------------------------  ----  ------  --------  -------- 
 Balance at 31 December 2018                 246   1,559     1,852     3,657 
------------------------------------------  ----  ------  --------  -------- 
 
 

Cash Flow Statement

 
                                                                 Note          Year ended          Year ended 
                                                                         31 December 2018    31 December 2017 
                                                                                  US$'000             US$'000 
--------------------------------------------------------------  -----  ------------------  ------------------ 
 Cash flows from operating activities 
 Purchase of financial assets - loans to investee companies       3                  (40)                (14) 
 Proceeds from sale of financial assets - return of capital       3                     -               4,400 
 Dividends received                                                                   188                 226 
 Operating and administration expenses paid                                         (562)               (879) 
                                                                       ------------------  ------------------ 
 Net cash (used in)/generated from operating activities                             (414)               3,733 
--------------------------------------------------------------  -----  ------------------  ------------------ 
 
 Financing activities 
 Tender offer                                                     6                     -             (3,442) 
 Net cash used in financing activities                                                  -             (3,442) 
--------------------------------------------------------------  -----  ------------------  ------------------ 
 
 Net (decrease)/increase in cash and cash equivalents                               (414)                 291 
 Cash and cash equivalents at beginning of year                                       554                 261 
 Foreign exchange (losses)/gains on cash and cash equivalents                         (1)                   2 
--------------------------------------------------------------  -----  ------------------  ------------------ 
 Cash and cash equivalents at end of year                                             139                 554 
--------------------------------------------------------------  -----  ------------------  ------------------ 
 

Notes to the Financial Statements

   1              General Information 

PME African Infrastructure Opportunities plc (the "Company") was incorporated and is registered and domiciled in the Isle of Man under the Isle of Man Companies Acts 1931 to 2004 on 19 June 2007 as a public limited company with registered number 120060C. The investment objective of PME African Infrastructure Opportunities plc and its subsidiaries (the "Group") was to achieve significant total return to investors through investing in various infrastructure projects and related opportunities across a range of countries in sub-Saharan Africa. On 19 October 2012 the shareholders approved the revision of the Company's investing policy which is now to realise the remaining assets of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

The Company's investment activities were managed by PME Infrastructure Managers Limited (the "Investment Manager") to 6 July 2012. No alternate has been appointed and the Board of Directors has assumed responsibility for the management of the Company's remaining assets. The Company's administration is delegated to Mainstream Fund Services (IOM) Limited formerly known as Galileo Fund Services Limited (the "Administrator"). The registered office of the Company is Millennium House, 46 Athol Street, Douglas, Isle of Man, IM1 1JB.

Pursuant to its AIM admission document dated 6 July 2007, there was an original placing of up to 180,450,000 Ordinary Shares with Warrants attached on the basis of 1 Warrant for every 5 Ordinary Shares. Following the close of the placing on 12 July 2007, 180,450,000 Shares and 36,090,000 Warrants were issued. The Warrants lapsed in July 2012. The Shares of the Company were admitted to trading on AIM, a market of the London Stock Exchange, on 12 July 2007 when dealings also commenced.

Financial year end

The financial year end for the Company is 31 December in each year.

Dividends

In the year to 31 December 2018 the Company declared and paid dividends of US$nil (2017: US$nil).

Going concern

In assessing the going concern basis of preparation of the financial statements for the year ended 31 December 2018, the Directors have taken into account the status of current negotiations on the realisation of the remaining assets and the general working capital facility of up to EUR400,000 as explained in note 14. The Directors consider that the Group has sufficient funds for its ongoing operations for the foreseeable future and therefore have continued to adopt the going concern basis in preparing these financial statements.

   2              Summary of Significant Accounting Policies 

This note provides a list of the significant accounting policies adopted in the preparation of these financial statements to the extent that they have not already been disclosed in the other notes below. These policies have been consistently applied to all years presented unless otherwise stated.

   2.1           Basis of preparation 

These financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets at fair value through profit or loss, and the requirements of the Isle of Man Companies Acts 1931 to 2004. The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise its judgement in the process of applying the Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 3.

In accordance with IFRS 10, 'Consolidated financial statements', the Directors have concluded that the Company falls under the definition of an investment entity because the Company has the following characteristics:

-- the Company has obtained funds for the purpose of providing investors with investment management services;

-- the Company's investing policy, which was communicated directly to investors, is investment solely for returns from capital appreciation and investment income; and

   --      the performance of investments is measured and evaluated on a fair value basis. 

As a result, the Company does not consolidate its subsidiaries, instead it is required to account for these subsidiaries at fair value through profit or loss in accordance with IFRS 9, 'Financial instruments' and prepares separate company financial statements only.

a) New and amended standards and interpretations adopted by the Company

IFRS 9, 'Financial instruments', final version issued July 2014. This standard replaces the guidance in IAS 39, 'Financial instruments: recognition and measurement' that relate to the recognition, derecognition, classification, measurement and impairment of financial assets and financial liabilities.

The standard became applicable and was adopted by the Company from 1 January 2018. The adoption of the revised standard resulted in changes in accounting policies, but these had no material impact on the amounts recognised in the financial statements and did not require any retrospective adjustment.

The Company classifies its financial assets in the following categories: at fair value through profit or loss, and at amortised cost. The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows.

Assets that are debt instruments held for collection of contractual cash flows where those cash flows represent solely payment of principal and interest are measured at amortised cost. The Company's financial assets at amortised cost comprise 'cash and cash equivalents' in the balance sheet.

The Company classifies its equity investments as financial assets at fair value through profit or loss upon initial recognition as it has not taken the option to irrevocably designate any as fair value through other comprehensive income. Related loans and similar debt instruments are also measured at fair value through profit or loss if they do not meet the criteria for amortised cost and the business model for holding the financial assets does not include the collection of contractual cash flows. The business model is for selling the financial assets in accordance with the Company's investing policy.

There has been no change to the Company's measurement policies for financial assets or financial liabilities. However from 1 January 2018, a provision for impairment is established by the Company assessing, on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. There has been no material impact as a result of the adoption of this standard.

   2.2           Foreign currency translation 

a) Functional and presentation currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). These financial statements are presented in US Dollars, which is the Company's functional and presentation currency.

b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

   2.3           Revenue and expense recognition 

Dividend income is recognised when the right to receive payment is established.

Expenses are accounted for on an accruals basis.

   2.4           Financial assets and financial liabilities 

The Company classifies its financial assets in the following categories: at fair value through profit or loss, and at amortised cost. The classification depends on the Company's business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.

Assets that are debt instruments held for collection of contractual cash flows where those cash flows represent solely payment of principal and interest are measured at amortised cost. The Company's financial assets at amortised cost comprise 'cash and cash equivalents' in the balance sheet.

The Company classifies its equity investments as financial assets at fair value through profit or loss upon initial recognition as it has not taken the option to irrevocably designate any as fair value through other comprehensive income. Related loans and similar debt instruments are also measured at fair value through profit or loss if they do not meet the criteria for amortised cost and the business model for holding the financial assets does not include the collection of contractual cash flows. The business model is for selling the financial assets in accordance with the Company's investing policy.

Financial assets at amortised cost are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets. The Company's financial assets at amortised cost comprise 'cash and cash equivalents' in the balance sheet. Financial assets at amortised cost are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. From 1 January 2018, a provision for impairment is established by the Company assessing, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.

The Company classifies its financial liabilities as other liabilities. Other liabilities are 'trade and other payables' in the balance sheet (note 8).

   2.5           Cash and cash equivalents 

Cash and cash equivalents comprise cash deposited with banks held with original maturities of less than three months.

   3              Financial Assets at Fair Value through Profit or Loss 

Investments are classified at fair value through profit or loss. Such investments are initially recorded at fair value, and transaction costs for all financial assets carried at fair value through profit or loss are expensed as incurred. Gains and losses arising from changes in the fair value of financial assets, including foreign exchange movements, are recognised in the statement of comprehensive income.

The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are in relation to the financial assets at fair value through profit or loss.

Fair value is the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The fair value of financial assets that are not traded in an active market is determined using valuation techniques. The Company uses a variety of methods and makes assumptions that are based on market conditions existing at each reporting date. Valuation techniques used include the use of comparable recent or proposed arm's length transactions, discounted cash flow analysis and other valuation techniques commonly used by market participants.

Regular purchases and sales of financial assets are recognised on the trade date, being the date on which the Company commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership.

The following subsidiaries of the Company which are classified as financial assets at fair value through profit or loss are held at fair value in accordance with IFRS 10:

 
                                         Country of incorporation   Percentage of shares held 
-------------------------------------  --------------------------  -------------------------- 
 PME Locomotives (Mauritius) Limited                    Mauritius                        100% 
 PME TZ Property (Mauritius) Limited                    Mauritius                        100% 
-------------------------------------  --------------------------  -------------------------- 
 

The following company is an indirect investment of the Company and is included within the fair value of the direct investments:

 
                          Country of incorporation   Percentage of shares held                        Parent company 
-----------------------  -------------------------  --------------------------  ------------------------------------ 
 PME Properties Limited                   Tanzania                        100%   PME TZ Property (Mauritius) Limited 
-----------------------  -------------------------  --------------------------  ------------------------------------ 
 

The following table shows a reconciliation of the opening balances to the closing balances for fair value measurements:

 
                                                   31 December 2018   31 December 2017 
                                                            US$'000            US$'000 
------------------------------------------------  -----------------  ----------------- 
 Start of the year                                            4,687              9,260 
 Increase in loans to investee companies                         40                 14 
 Subsidiary expenses to be paid by the Company*                 (4)                 17 
 Dividend**                                                      81                  - 
 Return of capital                                                -            (4,400) 
 Movement in fair value of financial assets                 (1,220)              (204) 
 End of the year                                              3,584              4,687 
------------------------------------------------  -----------------  ----------------- 
 

* The bank account for PME Locomotives (Mauritius) Limited was closed during 2017 and all money transferred to the Company's bank account. The Company is therefore responsible for its subsidiary's creditors at the year-end (note 8).

** PME TZ Property (Mauritius) Limited declared a dividend of US$269,640 in August 2018 of which US$81,198 was offset against the intercompany loan with the Company.

Assets carried at amounts based on fair value are defined as follows:

   --      Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1). 

-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The fair values of all financial assets at fair value through profit or loss are determined using valuation techniques which include significant unobservable inputs. The principal asset remaining in the group is the Dar-es-Salaam property. Accordingly, the fair values are classified as level 3. There were no transfers between levels during the year. The valuation techniques and the significant unobservable inputs are shown below.

 
                     Fair value as at   Fair value as at   Valuation           Significant         Sensitivity to 
                     31 December 2018   31 December 2017   techniques and      unobservable        significant 
                              US$'000            US$'000   inputs              inputs              unobservable inputs 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 Real estate                    3,581              4,683   Discounted cash     Discount rate       If the discount 
 investments (PME                                          flow property                           rate were 1% 
 TZ Property                                               valuation (inputs                       higher/lower the 
 (Mauritius)                                               including rental                        estimated fair 
 Limited)                                                  income, operating                       value would 
                                                           costs,                                  (decrease)/increase 
                                                           vacancy and                             by US$18,000 
                                                           discount rate) 
                                                           plus fair value 
                                                           of other net 
                                                           assets 
 Other 
  (PME Locomotives 
  (Mauritius)                                               Fair value of 
  Limited)                          3                  4    net assets         N/A                 N/A 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 Total                          3,584              4,687 
------------------  -----------------  -----------------  ------------------  ------------------  -------------------- 
 

The Dar-es-Salaam property was revalued at 31 December 2018 by independent professionally qualified valuer, M&R Agency Limited who has recent experience in the locations and categories of the respective investment property valued. The details of key assumptions used by the valuer are as follows:

Rental income wherein potential income is US$600,220 per annum (2017: US$ 877,815), rent reviews are assumed to be after every 3 years at 5% (2017: assumed to be after every 3 years at 5%) and remaining leasehold term of 20 years (2017: 21 years) from a 30-year lease since 2009 - this is supported by the terms of any existing lease, other contracts or external evidence such as current market rents for similar properties. Decrease in potential income is mainly due to the lower rate of the new rental agreements.

Operating cost at 20% (2017: 25%) of total revenue from the property - this includes necessary expenditure to maintain the property for its expected useful life. This percentage is comparable to the current level of operating cost.

Short and long term vacancy rate at 20% (2017: short term at 30% and long term at 20%) - based on current and expected future market conditions after expiry of any current lease agreements.

Discount rate at 9.05% (2017: 9.66%) - reflects current market assessments of the uncertainty in the amount and timing of cash flows. Calculation of discount rates includes the following inputs:

   --      Lending rate at 8% (2017: 8.10%) which is annual US$ lending rate by commercial banks; 
   --      Yield: 12% (2017: 12%); and 
   --      Capital mix of 30% equity and 70% loan (2017: 40% equity and 60% loan). 
   4              Net Asset Value per Share 
 
                                                                       As at 31 December 2018   As at 31 December 2017 
--------------------------------------------------------------------  -----------------------  ----------------------- 
 Net assets attributable to equity holders of the Company (US$'000)                     3,657                    5,170 
 Shares in issue (thousands)                                                           24,584                   24,584 
--------------------------------------------------------------------  -----------------------  ----------------------- 
 NAV per share (US$)                                                                     0.15                     0.21 
--------------------------------------------------------------------  -----------------------  ----------------------- 
 

The NAV per share is calculated by dividing the net assets attributable to equity holders of the Company by the number of Ordinary Shares in issue.

   5              Basic and Diluted Loss per Share 

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of Ordinary Shares in issue during the year.

 
                                                                           Year ended          Year ended 
                                                                     31 December 2018    31 December 2017 
-----------------------------------------------------------------  ------------------  ------------------ 
 Loss attributable to equity holders of the Company (US$'000)                 (1,513)               (875) 
 Weighted average number of Ordinary Shares in issue (thousands)               24,584              36,303 
-----------------------------------------------------------------  ------------------  ------------------ 
 Basic loss per share (cents) for the year                                     (6.15)              (2.41) 
-----------------------------------------------------------------  ------------------  ------------------ 
 

There is no difference between basic and diluted Ordinary Shares as there are no potential dilutive Ordinary Shares.

   6              Share Capital 

Ordinary Shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

 
 Ordinary Shares of US$0.01 each    31 December 2018 and 2017   31 December 2018 and 2017 
                                                       Number                     US$'000 
---------------------------------  --------------------------  -------------------------- 
 Authorised                                       500,000,000                       5,000 
---------------------------------  --------------------------  -------------------------- 
 
 
 C Shares of US$1 each    31 December 2018 and 2017   31 December 2018 and 2017 
                                             Number                     US$'000 
-----------------------  --------------------------  -------------------------- 
 Authorised                               5,000,000                       5,000 
 Issued                                           -                           - 
-----------------------  --------------------------  -------------------------- 
 
 
 Ordinary Shares of US$0.01 each                                                   31 December 2018   31 December 2017 
                                                                                            US$'000            US$'000 
--------------------------------------------------------------------------------  -----------------  ----------------- 
 24,583,942 (31 December 2017: 24,583,942) Ordinary Shares in issue, with full 
  voting rights                                                                                 246                246 
--------------------------------------------------------------------------------  -----------------  ----------------- 
 

At incorporation the authorised share capital of the Company was US$10,000,000 divided into 500,000,000 Ordinary Shares of US$0.01 each and 5,000,000 C Shares of US$1.00 each. The holders of Ordinary Shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at meetings of the Company.

The holders of C Shares would be entitled to one vote per share at the meetings of the Company. The C Shares can be converted into Ordinary Shares on the approval of the Directors. On conversion each C share would be sub-divided into 100 C Shares of US$0.01 each and will be automatically converted into New Ordinary Shares of US$0.01 each.

A tender offer took place in September 2017. Up to 16,389,294 Ordinary Shares were available for tender at a price of US$0.21 per share. A total of 16,389,294 Ordinary Shares with an aggregate nominal value of US$163,893 were validly tendered and were cancelled upon completion on 19 September 2017. Retained earnings were reduced by US$3,441,752, being the consideration paid for these shares.

Dividends and tender offers are recognised as a liability in the year in which they are declared and approved.

   7              Capital Redemption Reserve 

The capital redemption reserve is created on the cancellation of shares equal to the par value of shares cancelled. This reserve is not distributable.

   8              Trade and Other Payables 

Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the effective interest method.

 
                                                           31 December 2018   31 December 2017 
                                                                    US$'000            US$'000 
--------------------------------------------------------  -----------------  ----------------- 
 Administration fees payable                                             17                 19 
 Audit fee payable                                                       40                 42 
 CREST service provider fee payable                                       6                  6 
 Subsidiary expenses to be paid by the Company (note 3)                  13                 17 
 Other sundry creditors                                                  16                 13 
                                                                         92                 97 
--------------------------------------------------------  -----------------  ----------------- 
 

The fair value of the above financial liabilities approximates their carrying amounts.

   9              Operating and Administration Expenses 
 
                                                 Year ended          Year ended 
                                           31 December 2018    31 December 2017 
                                                    US$'000             US$'000 
---------------------------------------  ------------------  ------------------ 
 Administration expenses                                117                 167 
 Administrator and Registrar fees                        67                  84 
 Audit fees                                              41                  41 
 Directors' fees                                        224                 222 
 Professional fees                                       60                 336 
 Other                                                   43                  48 
---------------------------------------  ------------------  ------------------ 
 Operating and administration expenses                  552                 898 
---------------------------------------  ------------------  ------------------ 
 

Administrator and Registrar fees

The Administrator receives fees on a time spent basis, subject to a minimum quarterly fee of GBP8,250, payable quarterly in arrears.

Administration fees expensed by the Company for the year ended 31 December 2018 amounted to US$59,077 (31 December 2017: US$76,313).

The Administrator provides general secretarial services to the Company, for which it receives a minimum annual fee of GBP5,000. Additional fees for management information can also be charged on a time spent basis. For attendance at meetings not held in the Isle of Man, an attendance fee of GBP1,000 per day or part thereof will be charged. The fees payable by the Company for general secretarial services for the year ended 31 December 2018 amounted to US$7,785 (31 December 2017: US$7,949).

Administration fees of the Mauritian subsidiaries for the year ended 31 December 2018 amounted to US$13,991 (31 December 2017: US$17,325).

Administration fees of PME Properties Limited for the year ended 31 December 2018 amounted to US$39,158 (31 December 2017: US$53,405).

Directors' remuneration

The maximum amount of basic remuneration payable by the Company by way of fees to the Directors permitted under the Articles of Association is GBP200,000 per annum. The Directors are each entitled to receive reimbursement of any expenses incurred in relation to their appointment. The Executive Directors are currently entitled to receive annual basic salaries of GBP75,000.

Total fees and basic remuneration (including VAT where applicable) and expenses payable by the Company for the year ended 31 December 2018 amounted to US$224,156 (31 December 2017: US$222,143) and was split as below. Directors' insurance cover payable amounted to US$30,000 (31 December 2017: US$30,000).

 
                                 Year ended          Year ended 
                           31 December 2018    31 December 2017 
                                    US$'000             US$'000 
-----------------------  ------------------  ------------------ 
 Paul Macdonald                          97                  99 
 Lawrence Kearns                        109                 111 
 Expense reimbursement                   18                  12 
                                        224                 222 
-----------------------  ------------------  ------------------ 
 
   10            Operating Segments 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The chief operating decision-makers have been identified as the Board of Directors.

The Board reviews the Company's internal reporting in order to assess performance and allocate resources. It has determined the operating segments based on these reports. The Board considers the business on a project by project basis by type of business. The type of business is transport (railway) and leasehold property.

 
 Year ended 31 December 2018                                           Transport         Leasehold    Other*     Total 
                                                                                          Property 
                                                                 PME Locomotives   PME TZ Property 
                                                                         US$'000           US$'000   US$'000   US$'000 
---------------------------------------------------------   --------------------  ----------------  --------  -------- 
 Net losses on financial assets at fair value through 
  profit or loss                                                            (29)           (1,191)         -   (1,220) 
 Dividend income                                                               -               270         -       270 
 (Loss)/profit for the year                                                 (29)             (921)     (563)   (1,513) 
 Segment assets                                                                3             3,581       165     3,749 
 Segment liabilities                                                           -                 -      (92)      (92) 
----------------------------------------------------------  --------------------  ----------------  --------  -------- 
 
 

* Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses. Other assets comprise cash and cash equivalents US$139,141 and other assets US$26,137.

 
 Year ended 31 December 2017                                           Transport         Leasehold   Other**     Total 
                                                                                          Property 
                                                                 PME Locomotives   PME TZ Property 
                                                                         US$'000           US$'000   US$'000   US$'000 
---------------------------------------------------------   --------------------  ----------------  --------  -------- 
 Net gains/(losses) on financial assets at fair value 
  through profit or loss                                                     116             (320)         -     (204) 
 Dividend income                                                               -               226         -       226 
 Profit/(loss) for the year                                                  116              (94)     (897)     (875) 
 Segment assets                                                                4             4,683       580     5,267 
 Segment liabilities                                                           -                 -      (97)      (97) 
----------------------------------------------------------  --------------------  ----------------  --------  -------- 
 
 

** Other refers to income and expenses of the Company not specific to any specific sector such as income on un-invested funds and corporate expenses. Other assets comprise cash and cash equivalents US$554,414 and other assets US$26,460.

   11            Risk Management 

The Company's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The financial risks relate to the following financial instruments: financial assets at fair value through profit or loss, trade and other receivables, cash and cash equivalents and trade and other payables. The accounting policies with respect to the significant financial instruments are described in notes 2, 3 and 8.

Risk management is carried out by the Executive Directors.

Foreign currency risk

Foreign currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates. Certain of the Company's operations are conducted in jurisdictions which generate revenue, expenses, assets and liabilities in currencies other than US Dollars. As a result, the Company is subject to the effects of exchange rate fluctuations with respect to these currencies. The currencies giving rise to this risk are Euro and Pound Sterling.

The Company's policy is not to enter into any currency hedging transactions.

The table below summarises the Company's exposure to foreign currency risk:

 
 31 December 2018    Monetary Assets   Monetary Liabilities      Total 
                             US$'000                US$'000    US$'000 
------------------  ----------------  ---------------------  --------- 
 Euro                              -                    (1)        (1) 
 Pound Sterling                   20                   (77)       (57) 
                                  20                   (78)       (58) 
------------------  ----------------  ---------------------  --------- 
 
 
 31 December 2017    Monetary Assets   Monetary Liabilities      Total 
                             US$'000                US$'000    US$'000 
------------------  ----------------  ---------------------  --------- 
 Euro                              -                      -          - 
 Pound Sterling                   22                   (80)       (58) 
                                  22                   (80)       (58) 
------------------  ----------------  ---------------------  --------- 
 

The Board of Directors monitors and reviews the Company's currency position on a continuous basis and act accordingly.

At 31 December 2018, had the US Dollar weakened/strengthened by 4% (2017: weakened/strengthened by 3%) in relation to Euro and Pound Sterling, with all other variables held constant, the shareholders' equity would have (decreased)/increased by the amounts shown below:

 
                             2018       2017 
                          US$'000    US$'000 
----------------------  ---------  --------- 
 Euro                           -          - 
 Pound Sterling                 2          2 
 Effect on net assets           2          2 
----------------------  ---------  --------- 
 

Interest rate risk

Interest rate risk is the risk that the value of financial instruments will fluctuate due to changes in market interest rates. The Company is not exposed to significant interest rate risk from the cash held in interest bearing accounts at floating rates or short term deposits of one month or less. The Board of Directors monitor and review the interest rate fluctuations on a continuous basis and act accordingly.

During the year ended 31 December 2018 should interest rates have increased by 100 basis points, with all other variables held constant, the shareholders' equity and the result for the year would have been US$nil (2017: increased 100 basis points US$4,000) higher as a result of the impact on bank balances.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Company.

The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. This relates also to financial assets carried at amortised cost. Any change in credit quality of financial assets at fair value through profit or loss is reflected in the fair value of the asset.

At the reporting date, the Company's financial assets exposed to credit risk amounted to the following:

 
                              31 December 2018   31 December 2017 
                                       US$'000            US$'000 
---------------------------  -----------------  ----------------- 
 Cash and cash equivalents                 139                554 
---------------------------  -----------------  ----------------- 
 

The Company's financial assets at fair value through profit or loss are equity investments of the Company which would not usually be subject to credit risk. Portions of the underlying investments are in the form of loans and receivables, cash and cash equivalents or other instruments that are subject to credit risk, and therefore the value attributable to such instruments is provided in the credit risk table above. None of the financial assets are either past due or impaired. In addition, the Company has indirect credit risk within its financial asset at fair value through profit or loss, whose underlying assets includes cash and cash equivalents of US$235,271 (31 December 2017: US$282,835) and receivables of US$134,528 (31 December 2017: US$100,401).

The Company manages its credit risk by monitoring the creditworthiness of counterparties regularly. Cash transactions and balances are limited to high-credit-quality financial institutions (at least an Aa2 credit rating).

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its obligations as they fall due. The Company currently manages its liquidity risk by maintaining sufficient cash. The Company and the Group's liquidity positions are monitored by the Board of Directors.

The residual undiscounted contractual maturities of financial liabilities are as follows:

 
 31 December 2018    Less than 1 month   1-3 months       3 months to 1   1-5 years   Over 5 years           No stated 
                                                                   year                                       maturity 
                               US$'000      US$'000             US$'000     US$'000        US$'000             US$'000 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 Financial 
 liabilities 
 Trade and other                    92            -                   -           -              -                   - 
 payables 
                                    92            -                   -           -              -                   - 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 
 
 31 December 2017    Less than 1 month   1-3 months       3 months to 1   1-5 years   Over 5 years           No stated 
                                                                   year                                       maturity 
                               US$'000      US$'000             US$'000     US$'000        US$'000             US$'000 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 Financial 
 liabilities 
 Trade and other                    97            -                   -           -              -                   - 
 payables 
                                    97            -                   -           -              -                   - 
------------------  ------------------  -----------  ------------------  ----------  -------------  ------------------ 
 

Capital risk management

The Company's primary objective when managing its capital base was to safeguard the Company's ability to continue as a going concern in order to realise the remaining assets of the Company at a time and under such conditions as the Directors may determine in order to maximise value on behalf of the shareholders of the Company and to return both existing cash reserves and the proceeds of realisation of the remaining assets to shareholders.

Company capital comprises share capital and reserves.

No changes were made in respect of the objectives, policies or processes in respect of capital management during the years ended 31 December 2017 and 2018.

   12            Related Party Transactions 

Parties are considered to be related if one party has the ability to control the other party or to exercise significant influence over the other party in making financial or operational decisions. Key management is made up of the Board of Directors.

The Directors of the Company are considered to be related parties by virtue of their influence over making operational decisions. Directors' remuneration is disclosed in note 9.

   13            Income Tax Expense 

The Company is resident for taxation purposes in the Isle of Man and is subject to income tax at a rate of zero per cent (2017: zero per cent).

   14            Post Balance Sheet Events 

On 3 May 2019 the Company entered into a secured loan agreement with Optas GmbH ("Optas") to provide a facility of up to EUR400,000 to assist with general working capital. The loan is secured on the Company's cash receivables, is repayable within 18 months and attracts interest at a rate of 6% per annum on the utilised facility and 1% on the remaining unutilised facility. Paul Macdonald holds 50% of Optas's issued share capital, therefore Optas is deemed to be a related party of the Company and the loan is a related party transaction.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

FR ALMITMBAMBPL

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